Top 5 reasons why Microsoft acquired Skype

May 10, 2011 | Author: Adam Levine
Microsoft Skype

Last week, Skype again postponed its IPO. Then appeared the rumors that Facebook and Google are in talks to buy Skype. But today, suddenly Microsoft has acquired Skype for the record sum - $ 8.5 billion. With all respect to Skype - this is a very big sum. After all, Skype annual revenue is less than $1 billion and the net income is about $260 million. However, there are several reasons for Microsoft to overpay for this world's most popular messenger:

Reason #1 - Windows Phone

Windows Phone - is probably the main reason of this acquisition. Google has Google Voice, Apple has Facetime, but Microsoft - just the weak Windows Live Messenger, which would not add any value to Windows Phone. Moreover, last year Skype defiantly closed its mobile version for Windows Mobile. Of course, now the combination Windows Phone + Nokia + Skype deserves respect. Also Skype gives Microsoft the access to all mobile operators, which implement 4G technologies and want to play with Skype (to share revenues from voice traffic).

Reason #2 - Business communications

Microsoft has the own business communications solution - Lync (former MS Communications Server). But it's only used in large companies. And for small business Microsoft has nothing to offer, unlike its main competitor - Google. Windows XP Messenger that was quite popular in business was unsuccessfully replaced by consumer tool Windows Live Messenger. Of course, now, with Skype, Microsoft can provide the complete collaboration solution for SMB. In addition, Skype will empower (b2b) communications between companies (b2b), as well as between companies and customers (b2c).

Reason #3 - Dominance in the Internet

Probably, Microsoft executives still doesn't have a clue of how Skype can help them to empower their not-very-successful Internet strategy, but it is obvious that if they turn 650 million Skype_ID accounts to Live_ID accounts - it will give some result.

Reason #4 - Facebook

As known, Microsoft is an investor and partner of Facebook. And Facebook needs Skype. (Facebook even wanted to buy it itself, but probably it's not so mighty yet). Skype is an ideal video solution for Facebook (because of p2p technology) and the ideal desktop client for Facebook. (Remember, Facebook and Skype are already half-integrated). And if Facebook wins -> Google loses -> Microsoft wins. Something like that.

Reason #5 - Not to let Google buy it

Apparently, this explains why Microsoft paid such a money so fast. Of course, if Google bought Skype, all these opportunities would turn into big problems for Microsoft.

See also: Top 10 VoIP services

Author: Adam Levine
Adam is an expert in project management, collaboration and productivity technologies, team management, and motivation. With an extensive background working at prestigious companies such as Microsoft and Accenture, Adam's in-depth knowledge and experience in the field make him a sought-after professional. Currently, he has ventured into entrepreneurship, owning a thriving consulting and training agency where he imparts invaluable insights and practical strategies to individuals and organizations, empowering them to achieve their goals and maximize their potential. You can contact Adam via email adam@liventerprise.com